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BP Oil Spill Judge ‘Leaning’ Toward Pact Approval

The U.S. judge presiding over lawsuits tied to the 2010 Gulf of Mexico oil spill said he is “leaning” toward approving BP Plc (BP/)'s multibillion dollar settlement with private plaintiffs.

BP in March agreed to pay an estimated $7.8 billion to resolve most private plaintiffs’ claims for economic loss, property damage and spill and cleanup-related injuries. Lawyers for BP and the plaintiffs filed the accord April 18 with U.S. District Judge Carl Barbier in New Orleans, seeking preliminary approval. The settlement establishes two separate classes, one for economic loss and the other for any physical injuries related to the spill or the cleanup.

Barbier said at a hearing yesterday that he is “leaning” toward preliminary approval because “without it there can be no due process.” This includes sending out notices to potential class members, he said. “But again I remind people, this is just a starting point, not an ending point,” Barbier said.

Barbier said he would issue a ruling “within the next several days or a week or so.”

The blowout and explosion on the Deepwater Horizon drilling rig killed 11 workers and caused the worst offshore oil spill in U.S. history. The accident prompted hundreds of lawsuits against London-based BP; Transocean Ltd. (RIG), the Vernier, Switzerland-based owner and operator of the rig; and Halliburton Co. (HAL), which provided cementing services.

Other Claims

The proposed settlement, reached March 2, days before a scheduled trial on liability for the 2010 spill, doesn’t cover federal government claims and those of Gulf Coast states Louisiana and Alabama.

It also excludes claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deep-water drilling prompted by the spill.

Lawyers for BP and the plaintiffs argued yesterday before Barbier for preliminary approval of the settlement. Barbier didn’t hear from objectors to the settlement, including Halliburton. Barbier said he would review all objections.

“This is not a final approval of anything,” Barbier said as the hearing began. The proceeding is meant only to consider the request by BP and plaintiffs’ attorneys for preliminary approval, he said. “The earliest we could get final approval on this scheduled would be early November,” he said.

“Preliminary approval of both settlements is warranted,” BP lawyer Richard Godfrey told Barbier. The agreement is “comprehensive” and far-reaching, he said.

‘Full and Fair’

Unlike lawsuits over the Exxon Valdez oil spill or other class actions, “this is full and fair compensation offered now,” not after years of litigation, Godfrey said. “BP made a commitment to paying now,” he said.

“We tried to achieve the greatest good for the greatest amount of people,” said plaintiffs’ attorney Robin Greenwald, who described the medical benefits section of the settlement to the court.

BP and the Plaintiffs Steering Committee, a group of lawyers appointed by Barbier to handle the lawsuits, asked the judge to hold a Nov. 8 fairness hearing before final approval of the accord and to postpone any trial on liability until after the hearing. BP has agreed to pay claimants before final approval of the settlement, plaintiffs’ attorney Steve Herman told Barbier yesterday.

Macondo Well

The plaintiffs’ and government claims against BP’s contractors on the doomed Macondo well remain, and no new trial date has been set. A trial would cover federal and state government pollution claims, as well as cross-claims between BP and its partner companies in the Macondo site and rig.

Under the settlement, BP has assigned to the plaintiffs the company’s right to seek cleanup costs and the value of the lost oil from Transocean and Halliburton.

The proposed settlement between BP and the Plaintiffs Steering Committee will be paid out of a $20 billion trust set up to compensate spill victims. The trust has about $14 billion remaining.

BP has estimated the cost at $7.8 billion. All sides agree the amount may increase depending on the number of claims paid. The amount also may be lower than the estimate. If the trust is exhausted, the company will pay additional funds directly, lawyers for the plaintiffs said last month.

‘No Cap’

“There is no cap on the settlement,” plaintiffs’ attorney Joe Rice told Barbier at the hearing. Rice, an attorney with Motley Rice LLC in Mount Pleasant, South Carolina, was one of the PSC’s lead negotiators for the BP settlement. “No attorney fees will be deducted” from individual settlements, Rice said.

BP will pay attorneys fees and costs on top of the settlement amount, Rice said. Administration of the settlement will also be paid by BP, he said.

Halliburton is opposing the settlement, according to a court filing. The Houston-based company “objects to the limited amount of time available to analyze the settlement agreements and files these preliminary objections,” Donald E. Godwin, a lawyer for the Houston-based company, said in court papers filed April 24.

Halliburton also objects to the agreement because it assigns BP’s claims against the company to the plaintiffs lawyers and attempts to make Halliburton “liable in part for settlement payments,” Godwin said. The settlement also restricts Halliburton’s ability to settle claims, he said.

Quick-Pay Claims

Mississippi Attorney General Jim Hood said in a court filing yesterday that the spill victims who previously agreed to accept so-called quick-pay settlements should be allowed to participate in the settlement process. Individuals received $5,000 and businesses got $25,000 through the quick-pay claim system, regardless of the magnitude of damages they suffered.

Many of the 200,000 spill victims who gave up their right to sue for actual and future damages did so “as a result of economic duress,” because they didn’t have the economic staying power to wait for a court resolution of their claims, Hood said.

The American Shrimp Processors Association asked Barbier this week to delay preliminary approval of the settlement, calling it biased against some members of the shrimp industry. The accord treats shrimp harvesters and boat captains better than owners of docks and plants that receive the catch and prepare it for market, the organization said in court papers April 23.

The deal will allow victims who aren’t satisfied with it to opt out and pursue lawsuits against BP. Plaintiffs not covered in the overall settlement, such as those claiming harm from the drilling moratorium that followed the spill, can continue to pursue their claims, according to the April 18 filing of the proposed agreement.

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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